A company in its first year whose method of accounting is a cash basis (cash basis)...
A company in its first year whose method of accounting is a cash basis (cash basis) had expenses of $ 3,000 for professional services.
According to the IRS, what is the amortization?
Homework Answers
The processes of depreciating and amortizing are basically the same. The value of the asset is determined, and the life of the asset is calculated by comparing it to other similar assets. One of several different methods is then used to spread out the cost, depending on the type of asset.
The basic calculation for depreciation or amortization(Under IRS) in a year is calculated as:
- Cost basis of asset,
- Minus salvage value (for depreciation only),
- Divided by the number of years.
- According to the formula, Amortizarion can be calculated as :
Cost - Salvage value (If there is depreciation) / Number of years.
- In the question it is stated that the company is in its' first year.
- Amortization = Cost - Salvage value ( Here, there's no depreciation. Hence, no Salvage Value) / Number of years.
= 3000 / 1 = $3000
- Amortization for the first year of the company is $3000.
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A company in its first year whose method of accounting is a cash basis (cash basis)...
A company in its first year whose method of accounting is a cash basis (cash basis)...
A company in its first year whose method of accounting is a cash basis (cash basis) had expenses of $ 3,000 for professional services. According to the IRS, what is the amortization?
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In its first year, a company performed services for a customer and billed the customer $10,000. In the second year, the customer pays the company for the services rendered in the first year. In the first year, the company incurred and paid $3,000 of wage expense. If the company uses the accrual- basis of accounting, then it will report O revenue of $10,000 in the first year and expense of $3,000 in the second year. O revenue of $10,000 and...
part b: Calculate the first
year’s net income under the cash basis of accounting.
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